Ditch The GDP Or Include The GPI?

 The Gross Domestic Product (GDP) Measures The Profit of Doing Business, The Genuine Progress Indicator (GPI) Also Measures The Costs Involved In Doing Business.

The Guardian journalism smiley face

Bhutan’s gross national happiness and Vermont’s genuine progress indicator are both metrics which measure a nation’s success on metrics that go beyond purely financial. Photograph: Alamy

Double-entry bookkeeping is a bitch. I remember the first time I envisioned starting a retail business, picturing all the money I’d make before a mentor taught me the basic costs of doing business. After calculating expenditures for rent, paying staff, and overhead, I learned why it’s so critical to understand the difference between net and gross profits.

This fundamental tenet of business hasn’t been incorporated into the basic measure of value the world has used for almost eight decades. By definition, the gross domestic product evaluates gross measures to determine the supposed success and happiness for a country and its citizens. Never mind the ethical issues, as recently reported, that countries such as the US and the Netherlands are factoring in revenue from prostitution and drugs into their GDP estimates.

 

On a basic accounting level, GDP measures haven’t historically reported the costs of doing business in areas like the environment or employee wellbeing. And in a world of finite resources, where potable water or the amount of stress a worker can handle have limits, businesses and lawmakers alike are beginning to recognize the urgent need to move beyond GDP metrics to better measure what matters in our world and lives.

 

These new metrics and a focus on pragmatic change were the primary themes of the recent Happiness and Wellbeing Conference held in Burlington, Vermont last week. Subtitled “building a national movement”, the event featured dozens of scientists, lawmakers, psychologists, economists and statisticians all focused on how to foster metrics that better measure the full breadth of citizen wellbeing beyond a primary focus on wealth.

 

A specific measure discussed at the conference immediately relevant to the business world is the genuine progress indicator (GPI). While a great deal of attention has been paid to gross national happiness (GNH) created by Bhutan, the GPI features a similar focus on measuring multiple areas of wellbeing beyond financial metrics. As John de Graaf, a speaker at the conference, noted in a recent article for Truthout, Building A Movement for Happiness, the GPI has now been adopted by the state of Vermont: “Its legislature, with support from Democrats, Republicans and Progressive Party members, has established a state GPI, that uses some two dozen measures of health, wealth, education, leisure and sustainability to measure progress.” Maryland has also incorporated GPI into state measurements of wellbeing, and features an excellent videoexplaining how it works.

 

“GPI is basic double-entry bookkeeping.” Eric Zencey is a fellow of the Gund Institute for Ecological Economics and coordinator of the Vermont GPI Project. As he noted: “Any business person knows you have to deduct costs of producing benefits from the value of the benefits you produce—you have to look at net, not gross. Under GPI, policy makers will have to establish regulatory, licensing and taxation regimes that require companies to cover these costs instead of continuing to let companies impose them as an unlegislated tax on the populace as a whole.”

The good news for businesses is that double-entry bookkeeping offers new opportunities for revenue. By taking a wider measure of wellbeing, companies are improving profits in areas such as increasing employee wellbeing at work as noted in the second annual World Happiness Report: “Harter et al. (2010) found in a longitudinal study of ten large organizations that worker engagement makes a difference to productivity. Work units in which employees were satisfied and otherwise felt highly engaged with their work led to improvements in the bottom line, measured in terms of revenue, sales, and profit.”

Other speakers at the Conference such as Laura Musikanski, co-organizer for the event and executive director for The Happiness Alliance emphasized the benefits from gross national happiness and other measures, as it’s being adopted in the US. A former executive director for Sustainable Seattle, Musikanski has created a GNH Surveythat more than 30,000 people have taken in under two years. It features hard data about multiple domains of wellbeing in an interactive page on her site. The survey is being used by dozens of cities and organizations around the US, including businesses such as Place of the Future, where founder Mika Kim incorporates the GNH Survey as part of her work. “With the research conducted to date with the GNH Index Surveys in workplaces, we were able to make a determination of the direct correlation between productivity and worker happiness with a finding that the number one issue is time balance.”

It’s time to move from gross to good. While adopting GPI or GNH metrics will take some adjustment, growing evidence highlighted at the conference is proving the net gain of measuring wellbeing beyond wealth, and the happiness that results.

John C. Havens is the founder of The H(app)athon Project and author of the book, Hacking Happiness – Why Your Personal Data Counts and How Tracking it Can Change the World

 

The social impact hub is funded by Anglo-American. All content is editorially independent except for pieces labelled advertisement feature. Find out more here.

 

WE’RE IN GOOD COMPANY!

As Co-Founders of HIPinthe253, Kate and Chiara are thrilled to be counted amongst such an array of Happiness and Well-Being enthusiasts!  Look who’s presenting along with us at the 5th Annual conference: HAPPINESS & WELL BEING: BUILDING A NATIONAL MOVEMENT.  We’re headed to Vermont this week to join in and learn from each other.  Check out our new best friends in the making:    GNH 2014 -Speakers

Here’s the Program:  GNH 2014 Conference Program

And here’s OUR workshop:  

HIPinthe253 (The Happiness Initiative Project in area code 253) Meets the GNH to Redefine What Matters – Chiara Wood and Kate Stirling

       How do we rally our local communities around this global movement to create an economy grounded in measuring what really matters? Our workshop offers three vignettes to engage us in role-playing different presentations we can then modify for use in our own communities. These vignettes are designed to enlighten, educate, entertain and enlist local support for our various projects.            

    The vignettes are built around these key ideas and research findings: 1) What contributes to our happiness and well-being?, 2) How does GDP deviate from measuring happiness and well-being?, 3) How does the US happiness and well-being rank against other countries? We offer strategies geared to different audiences (from youth to the local Chamber of Commerce) and a variety of methods (from data to movie clips).

     If you are already familiar with this material, our workshop will help you refresh and encapsulate it to work with your community. If this is new material, we trust you’ll come away inspired by what it offers. We will also include a segment on the challenges of building a local coalition, so that workshop participants can share their own experiences and concerns. 

 HOLD ON Vermont!  Here come The HIP Chicks from The 253!